Offshore Trust and Foundation, what could be better for asset protection?

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Today I would like to tell you about this option of protecting your assets, such as the creation of a Trust or Fund. Due to the economically difficult, unstable position of Ukraine, more and more businessmen use this form of protection, implementation, and

Today I would like to tell you about this option of protecting your assets, such as the creation of a Trust or Fund. Due to the economically difficult, unstable position of Ukraine, more and more businessmen use exactly this form of protection, realization, and sometimes hiding their assets. Trusts and Funds allow you to protect assets from the possible raider, forceful seizures, as well as to save profits from hard taxation. Important factors that need to be paid attention to when choosing an asset protection scheme (trust or fund) are:

1) the degree of confidentiality    

2) the fact of recognition of trust legislation in a particular jurisdiction,   

3) the goals that you set for your offshore trust or foundation.

Offshore trust- high asset protection

– extreme flexibility and high asset protection

– great for inheriting assets

– the complexity of understanding and creation

– complexity or impossibility of making changes after creation

– the high cost of creation and maintenance

       This is a general understanding of possible ways to protect assets and optimize taxation. I propose to consider the type of company as trust and asset protection in more detail at

Trust – this is an agreement (agreement) under which the property of the founders is placed at the disposal of the manager, but in fact, the beneficiaries (the true owners) own it and receive income. The objectives of the trust are asset protection (the property transferred to the trust cannot be credited to the claims of creditors and third parties), tax optimization. Among other things, it should be noted that trust is a good alternative to a will. The most interesting jurisdictions for creating a trust are the British Virgin Islands, the Bahamas, Belize, Cyprus, New Zealand, Panama, Liechtenstein. Thus, the trust is not a legal entity and is based on a special form of contractual relations in which three parties take part: Founder, Trustee, Beneficiary. Assets that are transferred to a trust may be tangible or intangible. For example, cash, real estate, jewelry, art objects, patents, insurance policies, stocks, and other securities. The description of the property must be stated in the trust agreement, for example, the “diamond ring”. The minimum total value of assets that are transferred to a trust is not prescribed by law and may change during the life of the trust. All offshore ns trusts must have a local registered agent and address of registered office.

A trust transaction is the main document of a trust that regulates its activities and according to which the founder transfers the assets belonging to him to the management of the trustee. Under the trust transaction, the founder can transfer the property as during his lifetime? lifetime trust, and to provide such a transfer after his death? testamentary trust It should be remembered that when the purpose of creating a trust is to protect assets, the founder of the trust cannot act as a trustee, otherwise the trust will not perform its main function. The trust agreement may assign a Protector with the necessary authority. There are four main types of trusts:

  • Charitable Trusts. Created for charitable purposes or as charitable organizations. Trusts may enjoy tax benefits, depending on the laws of the jurisdiction in which they are registered.  
  • Non-charitable or trust trusts are used to protect assets (property transferred to a trust ceases to be the property of the founder).
  • Trusts for succession planning are used as a replacement for a will (which usually costs considerable time and money).
  • Trusts against the wastefulness of the beneficiaries serve to protect the beneficiaries of the trust from themselves. Such trusts prevent unjustified waste when, for whatever reason (illness, various types of dependencies, etc.), the beneficiary is unable to reasonably dispose of the assets.

The big advantage of the trust is the ability to hide the founder and beneficiaries behind the trustee while retaining the right to receive income from the investment property. A trust arises due to the signing of an agreement, declaration or will, which does not require state registration, therefore, it is very difficult to track the data of the founder and beneficiaries.

Taking into account the long-term nature of the trust and the instability of the situation in some countries of the world, it is advisable to choose the state of registration, which allows redomiciliation – the procedure for transferring the trust to the jurisdiction of another country in the event of adverse circumstances.

A trust, for tax optimization purposes, is registered in offshore jurisdictions, where there is a minimum tax on profits and capital gains, or there is no tax at all. It is better for the founder to transfer his property to trust from a non-resident controlled by him. For example, in the form of corporate rights of an offshore company that owns a share of the authorized (share) capital of a Ukrainian company. If the assets of the resident of Ukraine are outside its borders, then the specified procedure for their transfer will be almost the best to preserve the confidentiality of the owner, his assets and future inheritance.

In general, the trust legislation allows you to move trusts from one jurisdiction to another, so it does not matter what your trust is Meng, Nevis, Cyprus, at any time the founder himself, or through the protector, can change the country of registration of the trust. The working conditions of the trust, in each country, may differ by the requirements of the trust legislation, in general, the trust almost everywhere must have a license for this activities and be a resident of the country making the trust agreement.

If you try to transfer shares or shares of a company or real estate to a trust, then such a trust will be challenged in court in Ukraine. Therefore, initially, you should be structured: shares, shares, real estate you transfer to an offshore company, or a contribution to the share capital or sale through a notary. After that, the offshore becomes the owner and you transfer its shares to the trust and the trust company becomes 100% a shareholder and corporate director in the offshore and manages them in favor of the indicated beneficiaries. If you have a plant, for example, in Ukraine, then transferring it to trust is quite simple: you structure your assets, transfer ownership of shares or shares to a Cyprus or British company, if you plan to pay dividends, and then transfer the company’s shares to a trust. When selling a factory,

If you have a legal entity in Ukraine, you need to structure your asset, transfer ownership of shares or shares to a Cyprus company, if you plan to pay dividends, after which you must transfer the company’s shares to a trust. When selling a factory, Trust sells shares of a foreign company and credits the received funds to your trust account.


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